Forget Cantarell, KMZ Latest Oil Concern For Mexico And U.S.

Speaking of Mexico, who remembers a few years back when it was feared that declining crude oil production- rather than the drug cartels- would more severely-impact the stability of our southern neighbor? At the time, most of the focus was on the giant Cantarell oil field- and its worrisome production decline. From the Eurasia Review website on July 11:

Mexico was the seventh-largest oil producer in the world, and the third-largest in the Western Hemisphere. State-owned Petroleos Mexicanos (Pemex) is one of the largest oil companies in the world. However, oil production has decreased in recent years as production at the giant Cantarell field continues to decline…

The Cantarell oil field was once one of the largest oil fields in the world, but production there has declined dramatically in the past several years. In 2010, Cantarell produced 558,000 bbl/d, down 19 percent from the 2009 level and down 74 percent from the peak production level of 2.14 million bbl/d in 2004.

The piece goes on to note how important crude oil production is to Mexico- as well as the United States:

The oil sector is a crucial component of Mexico’s economy: while its relative importance to the general Mexican economy has declined in the long term, the oil sector still generated 14 percent of the country’s export earnings in 2010, according to Mexico’s central bank. More importantly, the government relies upon earnings from the oil industry (including taxes and direct payments from Pemex) for 32 percent of total government revenues. Therefore, any decline in oil production has a direct effect upon the country’s overall fiscal balance

Mexico’s oil production has declined in recent years, but the country continues to be the second largest source of U.S. oil imports.

(Editor’s note: Italics added for emphasis)

Luckily for both, a different oil project has offset Cantarell’s decline in recent years. Eurasia Review staff pointed out:

The KMZ project has been the largest source of new production growth in the past few years. Located adjacent to Cantarell, the KMZ complex produced 839,200 bbl/d of crude oil in 2010, up from 808,000 bbl/d in 2009. In just the last four years, production at KMZ has doubled, as Pemex has employed a nitrogen re-injection program similar to that used at Cantarell. Production growth at KMZ has partially offset declines seen at Cantarell, and Pemex hopes to increase production further over the next few years.

However, all may not be well. Mexico suspects KMZ crude oil production will peak two short years from now. From Robert Campbell of Reuters UK back on January 24:

Mexico expects output from its Ku Maloob Zaap offshore heavy oil complex to continue to rise over the next three years as satellite deposits of crude are developed, according to a government report released on Monday.

Output from Ku Maloob Zaap (KMZ) should peak at 927,000 barrels per day in 2013, up from approximately 850,000 bpd at present, with the start-up of the Ayatsil and Pit satellite fields, Mexico’s energy ministry said in its annual forecast of crude oil production…

The latest forecast assumes output from the KMZ area will start to slowly decline in 2014.

(Editor’s note: Italics added for emphasis)

It’s possible this scenario may even be too rosy. Campbell added:

Analysts have dismissed Mexican official oil production forecasts as unrealistic in recent years because of their optimistic view of decline rates at existing oil fields and heavy reliance on new discoveries.

Sliding Mexican oil production and limited political will for dealing with the problem, which threatens the long-term sustainability of government revenues, prompted two ratings agencies to downgrade Mexican debt in 2009.

(Editor’s note: Italics added for emphasis)

2014 looks to be a pivotal year for Mexico. Should our neighbor to the south start experiencing year-over-year declines in oil output- and government revenue- what does that mean for that country’s stability considering the ongoing difficulties already associated with combating drug cartel violence? Furthermore, will the United States be forced to look elsewhere to satisfy its tremendous thirst for crude oil? As of April, Canada, Saudi Arabia, Mexico, Venezuela, Nigeria, Iraq, Columbia, Angola, Russia, and Brazil were the top ten countries for U.S. oil imports this year. Not exactly a list chock-full of America’s “besties,” if you know what I mean.


“Mexico Energy Profile: Still Second Largest Source Of US Oil Imports.” Eurasia Review. 11 July 2011. ( 28 July 2011.

Campbell, Robert. “Mexico raises view of peak oil from Ku Maloob Zaap.” Reuters UK. 24 Jan. 2011. ( 28 July 2011.

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